Cost of Quality

Well, hello, my old, complex friend...

As I sat down to examine cost of quality (COQ) at Minitab, I flashed back to my certified quality engineer (CQE) exam almost 20 years ago. I can still vividly remember staring down at a particularly difficult cost of quality question and wondering why I didn’t just follow my fourth-grade career assessment and become a novelist.

I briefly considered fleeing the building, buying a bottle of absinthe, and channeling Hemingway. But then I remembered that, even with absinthe, I was no Hemingway and was probably ill-equipped to produce the next great novel. So, alas, I stayed, answered the COQ questions, and here I am 20 years later: assessing the cost of software quality.

OK, the absinthe part isn't true. Everyone knows that the Alcohol and Tobacco Tax and Trade Bureau didn’t lift the absinthe ban until 2007.

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Absinthe Dilemma

What is cost? What is non-cost? To pay, to own, may be to dream. Yes, I'm complex, too - but I like hard facts, though rude they can be. Please, Mrs. Keller, name me just one manager who cares for quality - or non quaiity - cost, and I'll pay you a best Maine lobster dinner. The fact being that most managers just eye the "last bottom right figure" on the budget balance papers, that's what they do. It's management constrainment in all senses, isn't it? The management process (self) control limits simply don't match with the specifications limits. Ride my seesaw: cost of quality or cost of non-quality? Please, let's correctly baptize costs: poor effectiveness, poor efficiency, POOR MANAGEMENT, poor skills, poor motivation. But rich, very rich salaries. Thank you.

CoQ leads to... ?

Dear Ms. Keller,

Much of what you've written has been written before. It's almost a mantra in industry that catching and fixing issues earlier in the process is cheaper than doing it later. All that is well and good. But, I am interested in understanding what actions follow after a quality professional presents the meticulously prepared cost-of-quality analysis to their management.

I've worked with many companies. Not any of them bothered with cost-of-quality analysis. That's because management understands well the costs associated with scrap, rework, repair, warranty, etc. I just haven't met anyone willing to do much about it other than set absurd targets without defining the methods of achieving them.

Has your cost-of-quality analysis led to actual actions being initiated to address the problem areas? While I believe that cost-of-quality analysis has been used to spur management into starting quality projects, a basic lack of appreciation of what quality is dooms those projects to failure when cost reductions aren't immediately apparent.

I believe for an organization to be successful and have a long life (>50 years), it has to have a quality mindset. An intrinsic motivation to continually improve on past performance. The cost-of-quality takes care of itself in the process.

Best regards, Shrikant Kalegaonkar (twitter: @shrikale, linkedin: http://www.linkedin.com/in/shrikale/)

Source to study you are referring

Hello Ms. Keller,

You refering to a study in this artical, that typical companies spend "5–10 percent of quality costs on prevention, 20–25 percent on appraisal, and the remaining 65–75 percent on internal and external failure costs."

Can you please tell me where to find this study?

Thanks you!
Philipp